tv [untitled] September 16, 2011 4:30pm-5:00pm EDT
and that was one was a good t.r. as president of almost any of those usa and that is going to do it for now i'm christine for i want to thank you so much for watching we will be right back here and a half hour. like millions of americans i've lost thousands of dollars in retirement funds and i haven't had as bad as many so it's not just the balance of them it's about needs to . me ma'am. and it's. needed. now. since this is my film i get the last word this financial crisis will not be fair and golf
like. we say we live in the camp the risks the scientists want to send me. capitalism is our way of life the market system its highest expression in our media hypes it in quasi religious terms even if its impact is sometimes quite negative and even debated in classrooms can't we agree that capitalism is an economic system a system of production and distribution of things we need one i want to create. thank you but i'm not about to. there have to be other make thanks for the nominee at the operate. most of us recognize we live in an inherently volatile system problem free but so the
conventional wisdom goes better than any alternative many still believe the free market is our salvation even as our economy has crashed brought down to not just by greed but calculated scams and schemes the snout of the intent of our laws enrich a few and devastated the economy leading to a massive loss of jobs homes and personal wealth. that reads us and two thousand and six and i film that we trust who warned of accounting economic collapse. the stock that the next great economic crisis a special report of crap about the debt which it will create an economic crisis so big good luck threatens us i was called a dinner and a murderer and a law against elevation. in the sixty's just written
a little book called. i thought it up with a book that came out before lehman brothers went bankrupt speaking on wall street i called for a jail out not a bailout i used to think of wall street as a financial center i now think of it as a crime scene. nomi prins was a managing. bear stearns and goldman sachs this is the most expensive take out the biggest crime. in world history we're talking about a crime we can't even quantify you're talking to trillions of dollars and a lot of this film will explore the scale of money's missing written off lost ripped off in these various scams and in the case of the bailout funds unaccounted for. or even caught or editor of vanity fair we have some to the best when he wrote it can fairly be said that the chain of catastrophic bets made over the past decade
by a few hundred bankers we will turn out to be the greatest and nonviolent crime against humanity in history they brought the world's economy to its knees last tens of millions of people their jobs and it's entrenched the retirement plans of a generation and they could drive an estimated two hundred million people worldwide it's a dire poverty in other words never before have so few done so much to so many and when experts estimate the total money last may reach a hundred ninety six point seven trillion dollars and that could be low like millions of a hurricane's i've lost thousands of dollars in retirement funds and i haven't had as bad as many it's not just about them it's about needs to i have a stake in it and like millions of angry about the way our economy with arrests.
to cope with our investigation we spoke with convicted white collar criminal san antonio the white collar criminal holes now with because for us to subpoena documents we destroy documents he was a pedo what this is why he was so you were at a disadvantage but of course the right color for that effect were economic credits . toona investigative reporter on the business speak wall street steals far newer than the mafia says gary relies on wall street. takes large much larger something might involve the mafia steps the regulatory system is such that they can get away with it the lack of media scrutiny the absence of regulation the widespread illusion that markets and real estate could only go up created a casino mentality and environment for successful fraudsters and write code criminals in your honor for many years up until my arrest on december
eleven two thousand and eight i operated a ponzi scheme i knew what i was doing was wrong and the criminal. white collar crime on wall street has been under reported except for a very few high profile cases as when hundreds of reporters staked out a new york courthouse to report only made all submission of guilt in his ponzi scheme and their millions of millions of dollars they owe it to the o.j. sort of day for many of them in the right oblique angry to have an ira worth one point three million my other money it's was about one point eight million because it's gone on that how do you think he got away with this for so long was now a person to run a stand for so many years without that effect that was one of the things i thought of i have it's fair nobody can successfully run a scam for that long. was not alone the regulators are now investigating scores of similar crimes they say there is
a ponzi money i'm under way there's four levels of every white collar crime is the guy that gives the what is the people at me what is the people that knew what was going on or didn't participate and the people that should have known what was going on like boards of directors or did says but that caused dissipate so what they try to do is they try to. get to the culpability of the guy at the top by working from the bottom the problem that you have the bernie made off cases they got the guy at the top first and he's protecting the other three layers underneath that wall street a lot only it turns to be very borderline illegal because the people at strat things tend to be the ones setting up the legal framework group economics is what loretta not only only calls it in her new book but the reason why the line between what is clear and what is not criminals disappear is because a did it will exaggeration when you remove all that is fiction when you remove all
the controls then of course what is legal i want this illegal so you're creating a crime scene and you're creating the crime and you're. affectively by the police officers all at the same time only in the form of a regulatory body or a system for the laws that work for the last three in june two thousand and nine the f.b.i. said it was investigating thirteen hundred securities fraud cases including many ponzi schemes as well as more than five hundred eighty corporate fraud cases most of these cases little attention but the media loves arch criminals like financier been argued off there's a complicated white collar crimes of which the government does not have the resources to thoroughly prosecute and the white collar criminals know it so they set it up not as a single transaction that's a crime but
a series of transactions that what's that it's all put together it makes it a crime to do that you have to go beyond the prosecution of one wrongdoer and look at the way wall street itself became a ponzi scheme you have to examine a pattern a system of criminality which brought the investment and real estate worlds together in a multi trillion dollars. scam. to simplify there were three interconnected rings in this circus and valving the biggest firms in the industry it started in the real estate business where our desire for homes the american dream was turned into a scheme first predatory subprime lending over years got people into mortgages they couldn't afford and the lenders knew they couldn't sustain it was enabled by artificially low interest rates with financing provided by twenty five of the top banks in the country the second component of the crime involved what happened next
when the biggest banks and investment houses on wall street bought and then securitized loans as structured financial products these mortgage bundles would be sold worldwide without full disclosure of their lack of underlying assets or the risks the banks that what is derivative products failed to do to diligence rely on rating agencies that overvalued their worth and accounting firms that did not do their job the whole process was corrupt to the core. finally the third level of this interconnected but a centralized criminal enterprise and evolved ensuring these often fraudulent practices in some cases betting against them by the very people who sold them the guarantee that they would be protected when borrowers couldn't afford the loans defaulted they used insurance companies like ai g.
. put these three criminal components together and a pattern emerges a pattern of financial crime. the financial crisis started because people could no longer afford to make payments on their subprime mortgage loan this is a good thing it was streets of disrupt i've been foreclosed all of that didn't see anyone under strict nobody moves in nobody wants the rents it the housing crisis hit america like a tsunami destroying neighborhoods and costing millions of families their homes just want. to suck up to. put the focus for us. how did it happen why did so many top banks lend to some of the poorest members of society in
a practice known as sub prime lending featuring loans like the one called need jobs no income no jobs no assets apparently no problem the reason higher fees up front and billions more when mortgages were turned into securities resold eye wall street . sixty percent of the subprime borrowers could have qualified for less costly prime rates but most were told their homes would go up in value many accepted onerous terms to give their families a piece of the american dream. and many old into believing they could afford houses with no money down and low introductory and frisk rates watch the cost of adjustable rate mortgages or arms should go up when i first got it i got a one percent introduction loan then my mortgage came down the second month and went up to seven point nine zero and now it's up to nine point nine and it just
keeps on going up if i'm paid forty eight hundred dollars a month for my home and one of them. that's to j. lo and marc here but. now where i. was. we should not have to leave our homes our dream i mean even ourselves because you know the rates are going up so high and we don't even understand why it's going to it's going in some ways pocket but not out of it should have been no surprise to anyone fraudulent lending practices resulted in a steep rise in foreclosures beginning in late two thousand and six some of the biggest subprime lenders themselves later declared bankruptcy in the news media homeowners took most of the blame it was said they had exercised a failure of personal responsibility irresponsible borrowing was statement sized irresponsible lending was not.
until the fifth best occasion the f.b.i. describes its responsibility for investigating financial fraud on its website is called mortgage fraud and epidemic and they're calling it operation alicia mortgage the f.b.i. failed the result of a three and a half month probe it's in mortgage related fraud f.b.i. director robert muller for this operation more than four hundred defendants have been charged and we have a paid one hundred seventy three convictions in crimes that accounted for more than one billion dollars and estimated yesus the f.b.i. first warned of this fraud epidemic and two thousand and four reporting also though that their corporate crime units had been downsized to join the fight against terrorism some criminal cases are reported in the press but not all are prosecuted with companies often paying fines rather than facing a judge or
a jury goldman sachs paid sixty million dollars to settle as brian complain the massachusetts authorities said they had this zine mortgages to fail and they paid sixty million dollars but they did not meet any that standard standard when wall street firms to go she ate. what are in effect clean bargains with regulators for them not to admit guilt according to an investigation by the center for public integrity twenty five of the sleaziest subprime lenders were backed by the biggest banks in the united states citi group wells fargo j.p. morgan chase and bank of america together the financial times reported they originated one hundred billion dollars in sub prime mortgages that's two thousand and five and two thousand and seven almost three quarters of the total.
what i did in the mortgage industry or first. i was alone originator. and during that time what i had seen was nothing short of amazing in terms it was very predatory its techniques that were being used the salesmanship that was being used the gimmicks on the roads and how it was structured it really disturbed me catchall to this and how they could get away with that is people here full disclosure depending on the lending institution you went to in other words a bank broker or when the institution or three different all three have different sets of regulations that govern them and so full disclosure it wasn't necessarily important to the loan itself just get them to sign on the dotted line if they were happy with the numbers you have no. how many bismo but over time with one say basically what we do is in someone's house or in his shoes and several other
issues but what i want to do is show the signature of it and. what we're finding out is eighty percent of people don't even know they have violations of. this is a signature on her. basically which is right here. and then have this signature here which is your actual signature which shows a completely different signature it doesn't take me an expert to figure out that there's something terribly wrong here someone has to set aside a loan docs and they're usually probably two to three inches thick and there might be fifteen or twenty really pertinent disclosures that force you to worry about ok and they're very dinner and i don't know what they're signing usually they'll send out a notary to sign the loan with them and one sign in the notary usually has no clue of what is in that loan and it's all part of the scheme we like to call it and then we go here we start looking it's white out and then we have a consultancy. we see a consultant fee on the mortgage that should set off red flags that there's not
really any consultants on a mortgage or sale that should have been one fee to rise mortgage this mark murphy is apparently someone we need to investigate and find out exactly who he is behind he got seven hundred dollars and a small these people basically project we took this woman's home and she's been living in for over fifteen years and thinking that it's hers where it was actually never was her since one thousand and three the fraud and deception that was built into these transactions it was necessary part of the transaction in order to generate the profits. wall street doesn't do mortgage lending but wall street did was package sell repackage and resell mortgages making what was a small housing bubble a gigantic housing bubble and making what became an american financial problem very much a global financial problem. who come to wall street today how common is snacks wolfe
who works in the financial industry he's our tour guide you're looking at people who've gone through ten unthinkable low probability events in a four month period where every time you think you can catch a reader there's another leg down atmospheres on trading floors and in a lot of these firms are few new aerial friends are gone bonuses are gone futures are on shore. it's been very difficult. people wanted to get you to play conversation i mean i'm sure whoever comes out of the bank examiner ten years ok and i'm going to going to read about the sort of the city called when i got all this is of course building year round you know there's just you see where all the guys are supposed to be watching you know what's going to. be when i was about ten or twenty years ago you know we had surprises in the way through the years you know but we got to the homes around nobody got her arms around this i just wonder if you think the average person in america really grasp that it's a process where i hope they do and i think it's an excellent busted my personal
guess is no my personal guess is they'd be much more angry and much more interested if they understood how much is on my plate here. the destruction there's around the clock a straight pay version it's trade deals all the money has been made at this point all the take out happened a couple years ago now you're just sort of looking at. a very profitable time which will be followed by another very profitable time because the same people will still be involved in stretching the same types of things his biggest crime in all of this is the thing that's the least able to be understood and examined by the f.b.i. by the department just as by anyone in washington d.c. pretty tiny lowest layer of the crisis that started with sub-prime defaulting at the homeowner borrower level the money wasn't there the money wasn't made because subsume layers of the pyramid wall street investment firms and commercial
banks investment groups decided to repackage those mortgages create layers of them and they then the resulting investors here's what happens there are three defaults on mortgages. the bank holds. sells those at ten cents on the dollar to a second bank that bank puts those together with three other defaults and three other the fall to make the second package and sells to a third bag the third bag sells six of these things for pictures and bungles them and sells them to some investor no idea what he has. they are really against those layers which is the real crime they would take a little piece of a layer of a security i don't need which somewhere there was a bunch of home buyers and they would take it and they would borrow thirty times the amount of money that it represents a five big investment banks dominated no street it is really who took the subprime
loans purchased from banks and package them as bundled investments to be sold worldwide there were reports that there was what was called. from wall street other words wall street investment houses as they began to make billions on these securitized loans and c.e.o.'s and the rivet is pressuring the mortgage people at the local level give us more give us more give us well you know the reason why wall street was putting the pressure of the sucking sound that you referred to earlier on the lower the originators because the profits that they were generated with this whole concept first opened up and people realized the money that was to be paid on the backend trading the paper they were essentially creating liquid cash from nothing which oftentimes does this fourteen trillion dollars worth of facts with sub prime and other types of mortgages and c.e.o.'s created between two thousand and three and two thousand and seven fourteen trillion were created on their.
investment houses had funds and private equity funds could leverage thirty forty times banks could leverage fifteen to twenty times i'm average they can only leverage thirteen times on certain security more than the value of the whole country of the whole gross domestic product if you are not religious in this. a very conservative estimate assume that the average for the fourteen trillion dollars worth of tax seals was ten times which to me is a conservative estimate that's one hundred forty trillion dollars worth nothing. if you lose the fourteen trillion the other hundred forty one of us the fourteen trillion doesn't exist you have nothing you have no collateral left to pay to the people you borrowed money from it all still they practice it to sell out mortgages so. clearly can't afford to target people in order
to give them mortgages and then take. it over to create mortgage backed security agreement this is for sure and i think the banks because there. are some cases criminal but that's why build your rises when they sell their portfolio to investors. and there were very injured victims that chain the distribution chain because i can correct school boards around the country that have lost. funds and lost their pension funds. now i have. no. such.
thing. and i would even say that this is racketeering because he took place between. real estate agencies and back. together a lot of people made a lot of money but when these homeowners. record numbers. the whole system became infected. culture is that so much of it is a huge because it is a mind is a friend series growing cycle of violence is this country the state it was the civil war or about to start it's the even if this current regime falls from. a time or even here broadcasting live from washington d.c. coming up today on the big picture.